The most successful economics blog in the world is called Marginal Revolution.
That is not an accident….

Consider a few common mistakes that reappear whenever marginal thinking is abandoned:

• • Treating the owner’s biography—wealth, identity, status—as if it entered the firm’s marginal conditions. It does not.
  • Confusing redistribution with allocation. Redistribution is a legitimate political choice, but it should not be smuggled into production decisions where it distorts incentives and blocks reallocation.
  • Ignoring opportunity cost. Resources used to sustain one activity are resources not used elsewhere. The relevant question is always: what is the next best alternative?
  • Believing that efficiency is static. In reality, efficiency is dynamic, and depends precisely on the ability of resources to move when margins change.

One of the most uncomfortable implications of marginal analysis is that reallocation is essential. Labor and capital must sometimes leave declining uses so they can enter expanding ones. That process is rarely smooth, and never painless. But blocking it does not make an economy more humane; it makes it poorer.

The twentieth century gave this insight a name. Joseph Schumpeter called it creative destruction. János Kornai warned that when losses are systematically covered—when budget constraints are soft—adjustment never happens, inefficiency becomes chronic, and stagnation follows.

Marginal analysis explains why. If losses have no consequences, margins lose meaning. Prices stop signaling scarcity. Productivity differences stop guiding allocation. The economy becomes a museum of preserved structures rather than a system that adapts.

Excellent throughout, here is the link.